Morningstar: Best And Worst Funds Of The Past Five Years

By Teresa Rivas

After clawing their way back from the depths of 2008 and 2009, markets are roughly at the same levels as they were in 2007. Yet while that half decade may have been not much more than break-even period for a number of individual equities, Morningstar has a list out today of funds that are far from their 2007 levels, for better or worse.

Analyst Dan Culloton shares his full list here, and at the top are Don Yacktman’s flagship Yacktman (YACKX) and Yacktman Focus (YAFFX) funds, whose contrarian philosophy and dogged commitment vaulted them to the top in recent years: “The more than 9% annualized gain of Yacktman and nearly 10% advance of the more concentrated Yacktman Focus were among the best annualized five-year domestic-stock fund returns on Oct. 9, 2012,” writes Culloton. However some recent big-name bets, from Procter & Gamble (PG) to PepsiCo (PEP), will likely hurt the funds’ returns going forward.

He also cites the Marsico Flexible Capital Fund (MFCFX), whose performance stands out from an otherwise uninspiring few years from Marsico Capital Management. The fund moved into emerging markets and cyclical and financial names in a big way in 2009, which boosted performance. Yet again, there’s a catch, as Doug Rao, who lead the charge, left the firm this summer.

On the flip side, there are the CGM Focus (CGMFX) Winslow Green Growth (WGGFX) funds. The former shows how quickly fortunes can turn; Cullton writes “Through Oct. 9, 2012, its 10.6% 15-year gain was better than 99% of the large-growth category, while its 10.3% loss for the five-year period was the peer group’s worst.” Meanwhile he called the Winslow Green Growth fund a victim of its coverage, as small, cutting-edge technological companies carry high risk and narrow focus—a strategy that can generate big returns or losses.

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.

Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.